Smart glasses that resemble ordinary eyewear are under increased scrutiny from European regulators and advocacy groups, leaving investors questioning whether sales can keep booming as Ray-Ban maker EssilorLuxottica (ESLX.PA) reports third-quarter results.

EssilorLuxottica launched its Ray-Ban Meta (META.O) smart glasses, capable of filming and recording, in 2023 and the market has grown rapidly.

Global shipments of AI-enabled glasses jumped to 8.4 million units in 2025 from around 2.1 million in 2024, according to research group Omdia. EssilorLuxottica's Meta eyewear accounted for 81.3% of global shipments in the first half of this year.

When it releases its third-quarter results on Tuesday, EssilorLuxottica is not expected to give precise data on the value of smart glasses sales, but may provide an indication. In its second-quarter trading update, it said smart glasses sales nearly doubled compared to the same period a year earlier.

The resemblance to ordinary eyewear has been a factor in the success of EssilorLuxottica's Meta smart glasses, and is in contrast to Google Glass (GOOGL.O) more than a decade ago, whose bulky, futuristic design limited mainstream consumer appeal. But the design's discretion is troubling to regulators.

Last week, the European Data Protection Board, or EDPB, which brings together national privacy regulators, said the devices facilitated covert recording, including of bystanders' conversations.

Louis Larere, portfolio manager at French asset manager BDL, echoed that concern.

"The fact that smart glasses include a camera, allow users to livestream and instantly share content on social media could become a problem," he said.

So far Norway has taken the toughest stance among governments, saying earlier this month it planned a temporary ban on the use of AI glasses in selected locations.

Australia said in September it was considering barring the use of camera-equipped smart glasses in government workplaces.

In a preliminary, non-binding statement, the EDPB urged manufacturers to combine measures such as visible recording lights, sound alerts and notifications to nearby devices while recording.

The authority also suggested limiting live streaming, automatically blurring bystanders' faces and using location-based technical restrictions in sensitive settings like hospitals or schools.

Ross Gerber, CEO of California-based wealth management firm Gerber Kawasaki, which holds Meta shares, said privacy concerns and social stigma could limit wider adoption even though smart glasses still hold long-term potential.

"People will make you feel uncomfortable if you wear them, and people feel uncomfortable wearing them because of this," he said, adding that his pair of Meta glasses was sitting unused in his garage.

A Meta spokesperson said the glasses remain popular for music, calls and live translations. "They were built to be noticed which is why every pair with a camera has a bright light on the front that flashes when you take a photo or video you can share with others," they added.

"It's important that rules protect people's rights while supporting innovation and consistency across technologies," an EssilorLuxottica spokesperson told Reuters, adding that the company is working to help consumers understand how to use the glasses responsibly and respectfully.

Data regulators in Italy and Austria both told Reuters that they were investigating incidents involving smart glasses being used by pupils in schools, and France's data watchdog previously said it had received a small number of complaints.

"Authorities should think about banning these devices in public spaces in a more coordinated manner," Kleanthi Sardeli, a lawyer at European digital rights advocacy group NOYB, told Reuters.

Growing privacy concerns could pose a challenge for EssilorLuxottica and Meta as they seek to position AI glasses, which can be used for making calls and listening to music, as a potential future alternative to smartphones.

"(Privacy concerns) are a risk to this category. We already saw something similar more than a decade ago with Google Glasses," Cedric Rossi, luxury and consumer goods equity research analyst at Stifel, said.

Rossi said Meta's unveiling in September of camera-free audio glasses was a first step toward addressing regulatory and privacy concerns. However, he added that, without a camera, users cannot fully benefit from the AI capabilities the devices are designed to offer.

Other companies, meanwhile, are still drawn to the category and Google, in partnership with Samsung (005930.KS), plans to release its Gemini AI glasses before the end of this year. Apple (AAPL.O) is also expected to release its own smart glasses.

BofA analysts in a report this month assessed the regulatory risk as limited and that an outright ban was unlikely even if additional restrictions emerge, particularly in Europe.